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Ontario LTT Consultation - Open for Comment

Ontario LTT Consultation - Open for Comment

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The province is reviewing the land transfer tax in two phases. During this phase, Ontario is requesting feedback on a proposed approach to facilitate compliance for taxpayers who have unregistered dispositions of beneficial interests in land, as detailed in the consultation document, "Facilitating the Payment and Administration of the Land Transfer Tax Under Section 3 of the Land Transfer Tax Act". Details on phase two have not yet been announced.

The consultation document notes that complex partnership and trust structures are often used to acquire and hold land in Ontario and that under some structures it is difficult to determine who is liable for the LLT.

The proposed approach in phase one includes measures to:

Introduce two new categories of vehicles (entities that are not corporations nor individuals)-one that pays the LLT and one that administers it on behalf of the vehicle partner or unit holder

Require disclosure (e.g., legal names and business registration numbers) of persons, trusts, partnerships and other vehicles that hold a beneficial interest in the land at the time of title registration.

The new approach introduces targeted rules for each category of vehicles. Group 1 entities must pay the LTT on their beneficial acquisitions of land, not on acquisitions or redemptions of interests in the vehicle (Group 1 entities include specified investment flow-through trusts and partnerships, some pension trusts, and certain mutual fund trusts). Group 2 entities collect the LTT from partners or unit holders (Group 2 entities include certain unit trusts and entities that have issued investments to at least 50 arm's length unit holders or partners).

Comments for phase one are due August 28, 2017.

Phase two will involve a broader review of how the land transfer tax is being applied in Ontario's real estate market and details will be announced at a future date.

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